5

International Migration

At the same time that Bangladesh was struggling with the GR, a silent process
of migration was already afoot – a beginning which would eventually gather
steam and take off. In 1976, only 6,000 workers left for the Middle East for
work but by 1981 this rose to around 56,000. Other countries in Asia, including
Pakistan, India, Sri Lanka, Nepal, Thailand and Philippines, were able to respond
more quickly to the dramatic opening up of labour markets in the oil-rich
Middle East following the lifting of the oil embargo in 1973 and a surge in
the petrodollar economies of the Gulf and Saudi Arabia. Thus, the number of
Indians sent out in 1976 was around 4,000 but this figure grew to over 275,000
in 1981. In the case of Pakistan, the figure for 1976 was less than 42,000, which
went up to over 168,000 in 1981 (Arnold and Shah 1986).
The slower initial response rate from Bangladesh may have been due to labour
market preferences or more likely due to the poor institutional arrangements
and high migration costs in Bangladesh compared to competing countries.1
Bangladesh in the mid-1970s was a country that was still struggling with the
aftermath of war and famine. Migration rates, nevertheless, picked up quickly
but spiked in 1991–95 and 2006–10, the latter including the global financial
crisis period. In fact, only during 2011–15 we observe a 12 per cent drop in
outmigration, which appears to be related to the 8 per cent decline in remittance
growth in the subsequent period (Table 5.1).2
Migrant remittances continue to play a big role in a number of Asian
countries including Bangladesh, helping to strengthen the BOP and shore up
foreign exchange reserves while also having an impact on rural households in
terms of income, consumption, savings and investment. A related impact of
remittances, historically, has been its timing – gaining ascendance at a time when
donor fatigue was setting in, putting aid-dependent countries like Bangladesh
at considerable risk (Rodríguez 2020). For example, for Bangladesh, remittance
earnings comprised 40 per cent of exports and 5.7 per cent of GDP in 2018.
In fact, the comparative figures for a number of countries like Nepal, Sri Lanka,
Pakistan and Philippines are higher (Table 5.2).

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 International Migration 79

Table 5.1 Out-migration of workers from Bangladesh (1976–2018)

Workers/Annum USD Per Cent Change

’000 Million Workers USD
1976–80 24.4 178 − −
1981–85 65.8 543.8 169.7 205.5
1986–90 85.8 745.4 30.4 37.1
1991–95 199.2 1,059.8 132.2 42.2
1996–00 240.4 1,707.4 20.7 61.1
2001–05 252.8 3,517 5.2 105.9
2006–10 612.2 9,243.8 142.2 162.8
2011–15 537.6 14,356 −12.2 55.3
2016–18 780.7 13,206.7 45.2 −8
Source: Calculated from Government of Bangladesh (2019).

Table 5.2 Remittance as per cent of exports and GDP: Selected Asian countries

Per Cent of GDP Per Cent of Exports

1980 2018 1980 2018
Bangladesh 1.86 5.65 3.0 39.6
Nepal 1.50 (1993) 28.0 107.7 233.3
Sri Lanka 3.80 8.40 11.6 39.2
India 1.48 2.88 24.8 16.1
Pakistan 8.64 6.73 61.9 69.8
Philippines 1.92 10.21 8.72 37.9
Thailand 1.18 1.48 4.79 2.2
Sources: ‘Personal Remittances Received’, World Bank Databank, https://data.worldbank.org/indicator/
BX.TRF.PWKR.DT.GD.ZS (accessed 16 October 2020); ‘Exports of Goods and Services’, World Bank
Databank, https://data.worldbank.org/indicator/BX.GSR.GNFS.CD?view=chart (accessed 16 October
2020).

In the 1980s there was a lot of speculation on whether the demand for
migrant workers would be sustained over time. Demands have sustained and
grown, and new destinations have emerged. These include Malaysia, Singapore,
Lebanon and South Korea, and, more recently, Japan, Maldives and Mauritius.
Increasingly, however, the demand is for skilled workers, especially as robotics
began to displace humans from tedious, repetitive occupations. Today, more than
10 million Bangladeshi workers are thought to be abroad and there is no sign that
the numbers will decline anytime soon.

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 80 The Odds Revisited

Migrant work opportunities have played a major role in the development

of Bangladesh by stabilizing the macro-economy, including the exchange
rate, building up foreign exchange reserves, enabling imports of capital and
intermediate goods, and transferring incomes to the rural economy where the
majority of the people and the poor live. While the economic impact is well
researched and documented, the socio-economic impact is less well understood,
although there is enough anecdotal evidence and some studies to indicate that
the reverse side of the coin can be dismal (T. Siddiqui 2001, 2006, 2008);
R. Roy 2017). One important aspect has to do with abuse and loss of freedom
and rights in receiving countries, for both male and female migrants but especially
for the latter. The other relates to the cost of migration, the incidence of violation
of contracts, prevalence of dubious methods of recruitment and cheating of
would-be migrants of their savings or borrowings. Thus, the ‘success’ of the
migration-remittance phenomenon is not unequivocal but comes at considerable
cost – costs that are well known but which policymakers often turn a blind eye to.
While Bangladesh has tried to create institutions that would regulate,
monitor and provide oversight to the entire process of recruitment, migration
and sending–receiving remittances through official channels, the entire system
remains exposed to a lot of abuse and weaknesses even today. The government
has over the years set up various agencies to make the process more efficient
and less costly. It has also instituted policies to encourage remittances while also
negotiating with countries like Saudi Arabia and Malaysia to recruit more labour
from Bangladesh. The chronology of major policy measures adopted is indicated
in Table 5.3.

Table 5.3 Chronology of major government interventions

Period Intervention
1974 Introduction of the Wage Earners’ Scheme (WES, premium on the exchange rate
for remittances)
1976 Setting up of the Bureau of Manpower Export and Training (BMET)
1982 Promulgation of the New Emigration Ordinance to replace the Emigration Act,
1922
1984 Formation of Bangladesh Association of International Recruiting Agencies
(BAIRA) – currently has 1100+ agents working under it
1984 BOESL (Bangladesh Overseas Employment Services Limited) – only state-owned
recruiting company
1990 Wage Earners’ Welfare Fund (WEWF) set up

(Contd.)

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 International Migration 81

Table 5.3 (Contd.)

Period Intervention
1998 Signed the UN International Convention on Protection of Rights of Workers and
Families (no receiving country has ratified the convention)
2002 Introduced the official licencing system for recruiting agencies
2003 Government relaxes restrictions on female labour migration
2010 Migrant Welfare Bank or Probashi Kalyan Bank (PKB)
2011 Migration and Overseas Employment Act
2012 Memorandum of understanding (MOU) signed with Malaysia for G2G
arrangements for sending workers
2013 Enacted the Overseas Employment and Migration Act, 2013 (more focus on
women and safe migration; accountability of recruiting agents)
Sources: Based on Mallick and Etzold (2015); ‘Institutional Assessment of Migration Systems in
Bangladesh’, http://documents1.worldbank.org/curated/en/446181539106128109/pdf/Institutional-
assessment-of-Bangladesh-migration-system.pdf (accessed 19 November 2021).

The government recognized the remittance potential quite early on,

responding way back in 1974 – well before the migrant market blossomed –
by introducing the Wage Earners’ Scheme (WES), quickly followed by setting
up the Bureau of Manpower Export and Training (BMET) – the public agency
intended to oversee all aspects of the worker migration process. In the context
of an administered and fixed exchange rate regime, the WES was an important
mechanism to provide quasi-market benefits to remitters. BMET has struggled
since inception to cope with the complex tasks that it was mandated to perform.
It was only in 2015 that a comprehensive review of BMET was conducted, in an
attempt to identify key areas of intervention (ILO 2015).
The initial spurt in migration occurred in 1981–85, growing by 170 per cent
over the preceding five-year period (Table 5.3). Although a big percentage jump,
this was from a low base. The most important policy intervention during this
period was the setting up of BAIRA, the Bangladesh Association of International
Recruiting Agencies, and BOESL (Bangladesh Overseas Services Limited), the
lone public-sector recruiting agency, both at the fag end of the period in 1984.
In other words, the growth spurt in 1981–85 cannot be attributed to any specific
policy intervention but more likely a result of independent, private-sector
responses.
The growth spurt of 1991–95 of 132 per cent and that of 2006–10 were large
and occurred from a fairly high base level. These spurts contributed immensely
to the current position of Bangladesh as a major remittance-receiving nation.

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 82 The Odds Revisited

In response to this rapidly growing market, a large number of recruitment

agencies were set up by people wanting to cash in on this boom.3
The basic organization for the migration of workers has been private sector
dominated from the very early days. The sourcing, hiring and placement of
workers from sending countries to receiving countries has been described as a
large transnational industry in which influential interests have become involved
on both sides. There are scouting agents who will scour the countryside,
essentially connecting potential migrants to private recruiting agencies who are
licenced by BAIRA. These companies will then negotiate with agencies operating
in the receiving countries. In the process, multiple nodes have developed from the
potential migrant to the ultimate employer, pushing up transaction costs at each
node: one estimate suggests that 60 per cent of the cost of migration is accounted
for by ‘agents’ (T. Siddiqui 2011; Barkat, Osman and Sen Gupta 2014). As if
this was not enough, the poor migrants, in addition, have to constantly contend
with spurious documents (including visas and contracts) that often lead to their
becoming undocumented workers overnight once they have arrived in a host
country to discover that the job or the employer that they were promised does
not exist. These risks, although widely reported, have not deterred supply of
workers given the high social status they enjoy at home once they start sending
money back.
The global labour market demand for Bangladeshi workers has fluctuated
considerably over time as older markets closed and new ones emerged. This has
happened in the case of Saudi Arabia and the UAE which at one stage stopped
recruiting from Bangladesh, although this was later offset by greater demand
from Qatar and Oman, and the emergence of newer markets in Southeast and
East Asia (Murata 2018).
In the present context of the Bangladesh story that we are trying to unravel,
the role of remittances has not only been entirely positive and complementary
but indeed critical to the various other development efforts initiated by the
government (food, family planning and infrastructure), the non-government
(education, health, grassroots institutions, micro-credit) and the private sector.
The immediate impact of remittances was to ensure a significant, more predictable
flow of scarce foreign exchange to complement meagre export earnings and
unpredictable aid, thereby having a huge impact on the balance of payments and
reserves, paving the way towards macro-economic stability.
At the household level, remittances increased savings and investment, and
generally had a positive impact on livelihoods. Chami, Fullenkamp and Jahjah
(2003), World Bank (2008) and Raihan et al. (2009) suggest that remittances
had a positive impact on reducing poverty, improving food security, education of

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 International Migration 83

wards and empowerment of women recipients, and improved health sanitation.

While it was frequently observed that remittances were not being ‘productively’
used, the increased household spending that resulted, nevertheless, helped
stimulate the local economy through increased demand as well as some
diversification of agriculture into cash crops and aquaculture (M. M. Rahman
2013; World Bank 2012; Siddiqui and Mahmood 2014).
At the root of the success of migrant remittances is the generation of strong
demand in the international market set off by the oil price boom of the 1970s
coupled with surplus, low-wage labour supplies available in countries like
Bangladesh. Despite Bangladesh’s slow start, it did not take long for it to catch
up because of its ability to compete with low wages in that market segment.
In fact, this combination of market access and low wages was also crucial for the
RMG story of Bangladesh. Similarly, the flow of substantial remittances to rural
areas resulted in a much more vigorous rural economy and expansion of the RNF
sector.
Luckily for Bangladesh, the flow of remittances sustained a robust growth
over decades even in the face of grave uncertainties and dire predictions. This
counter-cyclical behaviour of the Bangladesh economy appears to have become
a normal, even routine feature. Thus, we saw how remittances were scarcely
affected by the Global Financial Crisis of 2007–09, unlike many countries
that were reeling under its influence (Murshid et al. 2009). More recently, the
prediction from the World Bank (2021) of a large likely fall in global remittances
had to be revised when the fall turned out to be quite muted, and in the case
of Bangladesh robust remittance growth continued to buck the trend. Similar
patterns have been noted from other countries in South Asia.
While various plausible explanations have been floated, these remain
speculative and require empirical validation. These include travel restrictions
that prevented migrants from returning home (and bringing in cash directly),
shift from informal to formal channels because of stricter monitoring, a more
favourable exchange rate policy for official remitters making the traditional
hawala system less attractive, a tendency to send out savings in larger amounts
because of an uncertain climate, the greater-than-usual demand from families
back at home for assistance due to COVID-related unemployment or ill health
and, finally, the hefty stimulus packages deployed for the recovery of host-country
economies.

https://doi.org/10.1017/9781009128230.006 Published online by Cambridge University Press